This research aims to analyze the implementation of a fuzzy logic-based approach in improving the diagnosis of power transformer oil deterioration, which is critical for maintaining the efficient performance and operational life of transformers. Traditional diagnoses are based on strict measurements that do not account for the factors of variability and uncertainty of the actual data. In this article, we perform six different types of tests in this regard, and data have been collected during the period of 2021 to 2022 of 188 power transformer failures in the New KotLakhpat Lahore unit, whose voltage range is 132/66 kv and rating capacity is 40/50 MVA. In this case, a fuzzy logic-based scheme is developed based upon the membership function, a rule-based and defuzzification method that works with imprecision and the implementation of uncertainty in assessing the condition of transformer oils. Moisture, acidity, and a dissolved gas analysis indicator, along with other indication approaches such as interfacial tension, viscosity, and tangent delta measurement, are used to analyze the deterioration process in transformer oils. In the visual representation, oil samples with the following properties were first fuzzified: 19.9 mm2/s of viscosity, 0.453 mgKOH/g of acidity, 695 ppm of DGA, 20.8 mg/kg of moisture, 19.98 of IFT, and 4.35 × 100.14 of tangent delta. The output that was generated by software using the values entered into the parameters (HI and Age) after defuzzification is 45. Fuzzy logic serves as a concrete framework for transforming the diagnostics system and deterring the threats to the entire transformer’s health and reliability in the future. By using this technique, various faults were hypothetically and practically analyzed in a transformer to implement early detection technologies with the possibility to reduce maintenance costs and extend operational life up to 45 years. Various case studies indicate the effectiveness of fuzzy logic in comparison to traditional diagnostics.